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TMI Blog2011 (4) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Appellate Tribunal (for short "the Tribunal") dated 13-11-2009 for the assessment year 2004-05. 3. The assessee had claimed bad debts to the extent of Rs. 1,48,51,364 in the return filed for the relevant assessment year. The Assessing Officer vide his assessment order dated 22-12-2006 allowed the deduction of the bad debts claimed. The CIT(A) observed the assessment order to be erroneous and prejudicial to interest of revenue. The CIT(A) further observed that Assessing Officer has allowed the claim of deduction of bad debt written off during the year without any enquiry and investigation and without even ascertaining as to whether the condition as laid down in section 36(1)(vii) and section 36(2) are satisfied or not. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see and the amount written off did not have any connection with the business of the assessee. It was also contended that the provisions of section 36(2) were not complied with as the assessee did not show the above-stated amount as income during the years preceding to the assessment year. The assessee had conceded that though the amounts written off in respect of some persons were on account of inter-corporate deposits, the same had been given in the course of business. The assessee further submitted before the Tribunal that he had specifically brought this fact to the notice of the CIT(A) in an alternate prayer that the deduction of the same was allowable to the assessee company as a business loss under section 37 and the CIT(A) did not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were presented before the Assessing Officer, who had considered the same in detail and even had gave a questionnaire to the assessee which was duly replied with the details as required. 8. We have heard the learned counsel for the parties. We may note that the Tribunal in the impugned order has gone into the details of the reply and also the documents furnished by the assessee before the Assessing Officer and also in response to the notice under section 263 of the CIT(A). Some of the observations, which the Tribunal made are noted hereafter. The assessee had also filed the copies of the documents in respect of the legal cases against each of the parties for recovery of the amounts to justify its claim for bad debts before the Assessing Off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at in respect of inter-corporate deposits, the amount is capable of being treated as a bad debt and allowable as such. Thus, the view of the Assessing Officer is also supported by the decision of their Coordinate Bench. The Tribunal also observed that it cannot be said that there is an error, much less an error prejudicial to the interest of the revenue, in the assessment order and thus set aside the order of the CIT(A) passed under section 263 of the Act. 10. In the case of CIT v. Mysore Sugar Co. Ltd. [1962] 46 ITR 649 (SC), the corresponding sections of the Income-tax Act, 1922 were for interpretations before the Hon'ble Supreme Court. This case related to claim of bad debts under the said Act of 1922. The assessee company was changing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted; but the general scheme of the section is that profits or gains must be calculated after deducting outgoings reasonably attributable as business expenditure but so as not to deduct any portion of an expenditure of a capital nature. If an expenditure comes within any of the enumerated classes of allowances, the case can be considered under the appropriate class; but there may be an expenditure which, though not exactly covered by any of the enumerated classes, may have to be considered in finding out the true assessable profits or gains. This was laid down by the Privy Council in CIT v. Chitnavis [1932] LR 59 IA 290 and has been accepted by this Court. In other words, section 10(2) does not deal exhaustively with the deductions, which mu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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